When my 17-year-old son was a little boy, he and I were at the beach watching the horizon when a wave knocked us down and carried us into the water. It happened suddenly. We didn’t see it coming. I had read about rogue waves and riptides drowning adults but couldn’t imagine how it was possible until then. I grabbed his arm, tried to stay calm and swam parallel to the shore. We reached the beach but it was scary and eye-opening.
I had a similar experience running a hedge fund. I kept my eyes on the horizon and didn’t see the wave coming. When it did, I learned to protect the people around me. Ultimately, they protected me.
Preqin estimates that hedge fund assets fell $34 billion in the first half of 2016. Investors are concerned about weak performance. Inflows are being allocated to small funds that are generating strong results. Forget about fees, complexity, illiquidity and lack of transparency. Investors demand and deserve returns. In order to outperform, surround yourself with an outstanding team and support them. They will support you.
Protect your people
- Make your team feel safe. Studies show that people thrive when they feel safe to be their authentic selves at work. Treat your people like who they are: your teammates
- Share information. Show respect for your colleagues by telling them everything. The more they know, the more they can achieve. They sense it anyway. They know when something is wrong. Just tell them. There are no secrets. Just challenges and goals. If your team knows the circumstances, they can come together to overcome obstacles and capitalize on opportunities
- Invest in your people. Your assistant should be a notary and a technology expert. Your analysts should have their CFA. Pay for them to acquire skills and give them time to study. Don’t worry about them leaving. Some will. Most won’t. Focus on creating a firm they won’t want to leave. Few firms are this forward-looking. You will attract, train and retain the finest professionals. If they leave, they’ll remember and appreciate what you did and be a good friend and industry contact
- Invest in your culture. The best people seek the best environment. They should want to come to work. Clients like to see a happy team in a collaborative atmosphere, not a fancy address. Encourage people from across business lines to have lunch and go for dinner. Identify something meaningful to do as a group, such as Habitat for Humanity. It will lift you all and bring you closer to help others
- Pay fairly. Be generous but not excessive. When I first launched a fund, I overpaid. I was excited to have my own shop and eager to be a great boss everyone liked. I went too far; the goal isn’t for people to like you. They should respect and support you. Don’t go overboard with compensation but don’t be cheap. If you pay people only what you can get away with, they will jump when offered an alternative
- Listen to your colleagues. I used to be a command and control leader. I may have been a good motivator but I told my team what to do. Sit down with people individually and listen. Let them express themselves. You will learn a great deal and gain the ability to lead them well as a result of the dialogue. I remember sitting with my boss after one tough day and hearing him say, “This is bad, this Tuesday afternoon, but it will get better. What do you think?” Allowing me to speak instead of yelling at me enabled me to own my mistake, which empowered me to avoid repeating it
- Give (and take) unlimited vacation time. This may sound idealistic but we’re connected to work 24/7/365. We don’t track when work bleeds into personal time and should not focus on colleagues’ personal days. You hire people of integrity and drive so you may need to force them to disconnect. It will improve their performance. I remember being on vacation in December 1999 when the first BlackBerry came out. I sat on the beach feverishly emailing the office. I was hooked and could not put it down. It was the beginning of round-the-clock work life
- Know your team. After college, I was privileged to work in The White House. My boss took an interest in me, discovering I worked seven days a week and didn’t own a home phone or shower curtain. Before the iPhone and Amazon, he took me to Sears after work and made me take Sundays off. Getting away from the office and clearing my head led to me doing a better job on Monday
- Forgive. There is no need to forget, which would defeat the purpose of learning lessons. One day in The White House, I made a clumsy mistake. I told my boss, who had to tell his boss, who took it to his boss, who was one step away from the boss. They gave me a second chance. I had been terrified and was overwhelmed with relief. It’s been 24 years and every day I feel grateful and weak in the knees imagining if they had thrown me out. The forgiven are the most loyal
- Have fun. My White House boss used to bound into the office and ask, “Are we having fun yet?” It may sound frivolous but it’s important. As the leader of your firm, you’re a camp counselor. Feel good and encourage your team to have fun
There will be riptides
My son is now a much stronger, better swimmer than I am. The same will be true of your team. Together, you will endure and excel. There will be rogue waves. There will be riptides. Protect the people around you and they will protect you.